In the Finance Bill 2012 section 44AD has been amended retrospectively w.e.f A.Y. 2011-12 to the effect that presumptive scheme under the said section is not applicable to

√ persons carrying on profession as referred to in section 44AA(1) or

√ persons earning income in the nature of commission or brokerage income or

√ persons carrying on any agency business.

The said amendment has been made with retrospective effect from A.Y. 2011-12. Retrospective amendment is either made to validiate an earlier levy or to make clear the legislative intent.

Professionals are not covered under the presumptive scheme of section 44AD that was very much clear from the definition of eligible business as the word specially business was mentioned therein and business cannot include professions.

However, whether agency business or income from commission was covered under presumptive scheme under section 44AD or not, it was not clear from the wording of section 44AD and definition of eligible business contained in the explanation to the said section as word business has only been mentioned in the definition of eligible business and agency business could have been interpreted as business by any rational person.

Therefore there must have been certain cases where the assessees carrying on some agency business or earning income from commission may have filed their return of income under the presumptive income scheme of section 44AD. In such cases if such assessee’s(carrying on agency business or earning income from commission) turnover or income exceeds the limits prescribed u/s 44AA then such assessee would be required to maintain regular books of accounts and he should have filed his return of income as per balance sheet and books of accounts.

Therefore such assessee should revise his return of income and file his return in accordance with his books of account and balance sheet, as such assessee carrying on agency business is not covered u/s 44AD.

Thus after the retrospective amendment in section 44AD w.e.f A.Y. 2011-12, the assessees carrying on agency business or earning income from commission should revise their return of income of A.Y. 2011-12, if they have filed their return of income persuming them to be covered under section 44AD.

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(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email:, M +919815243335)

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    1. Shrinath says:

      An ‘agent’ is a person who agrees and is authorized to act on behalf of another. This another
      person is known as ‘Principal’ who authorizes and empowers the agent as his representative
      to carry out his legal acts. When the agent and the principal mutually agree, an ‘agency
      relationship’ starts between them. This relationship empowers the agent to carry out business
      transactions on behalf of the principal. Infact while dealing with the third parties, the agent
      steps into the shoes of his principal and all his legal acts are binding on the principal.
      An agent can be an individual, a company or any association of individuals. The document
      which empowers the agent is known as ‘Power of Attorney’, which is executed by the principal
      in favour of the agent. When the power of attorney relates to a particular transaction and for
      a specific purpose, it is known as ‘Specific Power of Attorney’. Whereas, when power of
      attorney relates to transactions in general, it is known as ‘General Power of Attorney’. The
      power of attorney may or may not be registered.
      An agent enjoys all the powers of the principal and binds the principal for all his legal acts. He
      can sue the third parties in the name of the principal and has a right to get reimbursement
      for the expenses incurred by him related to the business. But at the same time, an agent
      should act as per the powers vested in him and should act in the best interests of his
      principal. He should maintain proper accounts of all transactions and submit them to the

  1. Nitin says:

    Dear Sir,

    If an assessee is having two businesses 1) Retail trade and 2) Agency Business. Can he opt for 44AD for retail trade and P & L method for Agency business.

  2. praveen gupta says:


    pls. clarify if original return was filed late falling in the above case, then whether it shall be allowed to revise or not?

    Thanx in advance..

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January 2021